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Kenya’s import cover dropped to a seven-year low this week, highlighting a higher rise in imports amid declined inflows, the Central Bank said in its weekly update of the financial markets.
The import cover stood at 4.11 months, an equivalent of 7.29 billion U.S. dollars, a decrease from 7.32 billion dollars or 4.13 months of import cover the previous week, said the apex bank in its update released on Friday evening.
The last time the reserves covered 4.11 months of imports was in October 2015, according to the apex bank.
While Kenya’s current import cover is slightly above the requisite four months needed, it has declined below the recommended 4.5 months of cover by the East African Community.
Despite the decline, the Central Bank said the reserves are adequate.
Kenya’s imports rose 26 percent year-on-year to 1.25 trillion shillings (10.3 billion U.S. dollars) at the end of June, mainly pushed up by a faster rise in the oil import bill due to higher global prices.
Besides the higher rise in imports and low inflows, the east African nation’s foreign exchange reserves have been under pressure as the shilling declines against major world currencies.
The local unit traded to a new low of 120.94 against the dollar on Thursday, prompting the Central Bank to sell dollars to stabilize it so that it doesn’t fall to levels that disrupt the financial markets.
The CBK Governor Patrick Njoroge in a recent statement, however, expressed optimism that the forex reserves would reverse the downward trend towards the Christmas holiday. Enditem
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